Wednesday, 16 November 2011

Youth unemployment goes through the million mark

Plenty of hand-wringing in the media will ensure on this news. The Government will get blamed and implored as usual that 'something-must-be-done.' Whatever it does, it will be interesting to see how little in published articles the few homes truths are ignored:

1. Education - We have created a huge amount of graduate over-supply. 73 Graduates applying for every job currently. The solution is less university places and less waste which the Government is actually doing, but it gets brickbats for this rather than praise. As for school education, a generation and more has been betrayed by low standards.

2. Immigration - These low attainment levels mean that people can come here from 3rd world countries and plausibly be better workers than our own people. A terrible state of affairs. One thing to try is to reduce immigration but this has proved challenging. Another would be to encourage people to take jobs and learn skills through reducing benefits - but this is not very palatable to hand-wringing types.

3. Age bias - the Government will do something to encourage young people into jobs, but in reality it is older people who need money to look after the young. Why should older workers by penalised? Is it really harder to get a new job at 19 than at 57? Addressing the lack of job demand and over-supply of labour through an age-based rationing system is grossly unfair.

4. Job Creation - UK Corporates are sitting on huge cash piles whilst they watch the Euro-maelstrom. meanwhile the Government is slowly cutting a few non-jobs away. To get more job we need more private sector investment which won't happen this side of the Olympics. To at least try and make it happen we could reduce taxes, but that will require a leap of faith in making further cuts to the Public Sector. Hand-wringing types will be frothing if they have read this far.

All in all, its a hard problem to which  at least there are some clear answers, but because the answers are tough and divisive and not cute and cuddly there will be inaction. My estimate is youth unemployment will stay over a million for at last 2 years, possibly more as the population is continually boosted with young immigrants.

31 comments:

Weekend Yachtsman said...

And you didn't even mention the minimum wage.

Ralph Musgrave said...

Good summary. As you say, it's because the answers are not "cute and cuddly" that nothing will happen. If the politcal right were to advocate realistic solutions, they would inevitably be attacked by the left for being harsh, uncaring, etc etc.

Anonymous said...

As I have have a son going through GCSEs right now I wouldn't say that standards have dropped. More or less the same as the old O level for high achievers. The way testing is done is different but I see no real evidence that we have created a generation of idiots (well, no worse than when Gordon Brown was at school!)

Immigrants can find jobs in the UK because the benefits system will happily pay out £24,000 a year to UK citizens if they lose their job compared to an average salary of £21,000.

Anonymous said...

UK corporates sitting on huge cash piles? UK corporates are the most indebted in the EU.

To create jobs we need to improve competitiveness. We slipped 10 places under labour, which means some 400million more people are competing for our jobs that werren't under major.

SumoKing said...

I am struggling to reconcile number 1, it appears to read


1. AAAAAArgh, sending people to university! what the fcuk were we thinking! everyone in the UK can make a living being a joiner and hoping on an apprenticship scheme, especially with the mental homeownernerist planning stasi that refuse to have any houses built!!! It is just mental to have people over educated and who can take on less qualification intensive jobs if they need to!

oh

and also, while we remember

AAAAArgh! what the fcuk were we thinking not shoving as much education as possible down people's throats! kerist! now everyone thinks they can just go an be a joiner! well fcuk that! nobody is building a new house near me and dropping my illusiory house wealth no surrreee, them kids should have gone to Uni and learnt to make drugs, or aeroplane wings, or computer games, or did law or did lots of maths to khunt up the financial sector in about 12 years time!

Electro-Kevin said...

The hard choices won't be made, as you say.

The taxation required to carry this surplus of youth(for want of a better expression) should be quantified for every taxpayer in areas of high youth unemployment and then this should be added to every bill where there has been outsourcing or immigrant labour involved.

This will be more marked in areas of high youth unemployment where local government has chosen contracts with firms employing immigrants.

Pehaps stick that unemployment bill on the council tax or something.

Or would this be too honest ?

It would certainly make local politicians more accountable.

andrew said...

Not so much that we are doomed, but the patterns of work we have made bets on as a nation were not the right ones if we wanted mass employment.

Back in the early 80's the Thatcher govt saw all these unionised workers in 'old fashioned' heavy industry and then looked at all those bright young things working in clean places with big humming electrical boxes (that were computers before PCs were invented and that was me aged 15 on work experience).
They decided computers and services were a better future (or just did not support industry when they could have depending on how you look at it). At the time the Germans told us we cannot make a successful economy if we all cut each others hair. We laughed at them.

Fast forward to today and it looks like what is left of our manufacturing base is getting by.
In the city, people are still getting paid vast salaries.

Unfortunately much of the services sector has been and will be in long term decline in terms of employment numbers (it may well grow in terms of value).

The trouble (if you want a job) is that computers scale rather well, and used correctly act as efficient intermediation tools.

In the 'physical' sector (these things are not as clear cut as hard/soft or services/engineering), if you had plant worth X and employed Y people and wanted to double output,
(generally) you needed to spend a bit less than X on new plant and employ slightly fewer than Y new hires to do that (please nothing clever like sending it all to china or just adding an overnight shift).

In the 'softer sector' there are two effects.
(a) Automation of business processes
(b) Disintermediation

When I first started work there was ~60 administrators, ~12 actuarial/accountants ~6 legal/technical ~8 consultants/sales ~5 systems support and ~8 in a typing pool.

We got PCs so the typing pool started to go.

We got computerised Accounting / Valuation systems so we needed less actuarial/accountants (I went)

Some time later I became involved in designing systems / processes so that customers can work with a call center or 'serve themselves'

Now I see that business processes are explicitly designed so that you do not need people at all.

This started with First Direct in the 90s (no branches), we then had Amazon in the 00's (not easy to get a phone number for) and now we have organisations like GiffGaff (part of O2) that are proud to announce they have no-one you can call.

If businesses like GiffGaff need to double output, they do not need to employ any more people. Their business processes are set so that everything is completely automated and the only thing sitting between your phone and making a call is them.

There is no job for the ~60 administrators.

In the meantime the Germans got on with that losing strategy of making boring things efficiently

as EU wide youth unemployment statistics show

Bill Quango MP said...

No one in retail I know would willingly be employing a UK young worker over an EU young worker, where the choice exists. Its just simple experience. If you run a coffee shop and take a UK worker they may be brilliant. But 1 in 3 won't still be there after a month. 1 in 3 won't be there at the end of the week.
That's a ridiculous turn over.

In the old days my firm would seek out college kids to do part time, easy retail, work throughout the summer holidays. College and uni students were great. They were usually a significant step up from the bottom of the barrel full time workers we employed on low wages.
Pleasant, keen {they wanted the money to pay for their education} bright, and fun. The drop out rate was 1 in 5, which was pretty good.

Today
1. - Those summer jobs don't exist
2. - Taking on a p/t worker is the same as taking as on a full time one. Better to get a mum or an older person who is going to stay, is flexible, and isn't looking to move right on up all the time. Its not they won't ever move up, just that the immediate pressure to do so isn't on them.
3 - if the choice is between a UK ex student or an Eu its a no brainier, as you all know from visiting any shop in a town or city in the UK.
10 years ago it was impossible to recruit in the south east/ Midlands. Really impossible. A store manager job at £25k would not be filled..often for months and months.
I had a manager vacancy in a new retail park in Scotland that was unfilled for two years because it was quite far to drive too from Glasgow.
That was a decent salary too for Scotland. At the time well above average wage.

When the 1st EU 'basic' level workers, college grads level, arrived in the UK in the late 90's it was a massive relief. French and German and Spanish young people worked twice as hard, twice as long and twice as effectively.

Its not just Daily Mail frothing. Its a fact. And its been going on for years and years.

Budgie said...

My experience of EU, or other, foreign workers in manufacturing is the opposite of BQ's. They appear superficially to work well, but their (British) colleagues usually have to rectify their work.

The consequence is the British worker is castigated for being too slow as a result of spending time sorting out the mess the foreign worker has made. The bosses (who hire the foreign workers) are completely oblivious to this.

I have seen this happen in front of my eyes.

CityUnslicker said...

Nice comments all:

Anon - Standards have dropped, GCSE's are easier - Kids are leaving schools ranked worse than Korea and Thailand.

Other Anon - UK Corporates have been reducing leverage as fast as they can. My own company is hugely under-staffed but won't hire permanents because of macro worries that the world is about to end.

Sumo - balance is required. People need the basics, which they don;t get of reading, writing, maths and civility. 2.2's in psychology or media studies are proving less useful. We need grads, but not so many - we do though need much, much better schools.

EQ - A germ of a sensible idea there. Although it reminds me of Brown's pathetic British jobs for British Workers shtick.

Andrew - Sigh. Thatcher did not destory industry, unions did. We have massively uncompetitive heavy industry subsidised by the state. When the subsidies went, so did the industry. lots of things were tried to rectify this from the 60's to the 80's. None of it worked because it was cheaper for companies to start again in non-unionised countries with new equipment than re-tool here. Now itis not the case, what we do have is good - look at JLR for example.

However, your poitn re automation should be my 5th point. More computing/automation = less jobs = greater wealth inequality - this is a disease afflicting the west that will continue for my lifetime as the answers are too radcial to contemplate.

BQ/Budgie - Agree with Budgie re technical jobs, always had problems with cheap outsourced idiot programmers vs UK expensive but right people. In retail though, BQ is right. The overall point in the same though, immigration has caused huge over-supply of labour and a benefits culture supports this removing a chunk of the population from job seeking, but still requiriing support. it's a terrible position to be in and huge task to unwind.

Anonymous said...

Sometime next year we will be hitting the 3million, the jobless centres will be harassing people to get jobs when there are few jobs in the area or ajoining areas, when I was made redundant in early 1981, after signing on (queue 60 yards long) I went to the job centre there were 8 display boards and on each 6 jobs, the same ones. If MPs have to claim a second house allowance because it takes them 11/2hours to get home why do they require the jobless to do that. Most of the jobs in my area from what job seekers tell me are agency jobs by the nature very can be very short term. The government should make allowances for areas of high unemployment and jump down on those in high employment areas. During 1981 in the local paper it came to pass that if you were over 35 - too old (not 55, if you were single - no chance,too highly qualified-?, writing for jobs no reply- jobless centre wants to know why, after a time people lose heart. By the way I am out of the game now, I did not want carry on in the job I was in after 65. Don't get me wrong, I do NOT condone unemployed folks who could work but have no intention of working.

rwendland said...

The government should look closely at the "job intensity" of its discretionary spending, and favour spending that retains most jobs (of the type the current unemployed can do), while we have really excessive unemployment.

This will dis-favour work which uses much high-cost capital equipment (usually higher-tech, like defence procurement and HS2), and favour more mundane activities (probably things like council spending, squaddies and low-tech building). Perhaps not great in the long-term, but reduces unemployment and social costs now through the slump.

Sadly, this seems contrary to the current coalition approach, which seems to want to bring forward grand-project type capital spending, while reducing council spending and making squaddies redundant.

Anonymous said...

"Kids are leaving schools ranked worse than Korea and Thailand."

Thats because they learn by rote in Korea and Thailand and the measure of how well the schools is doing is also biased in favour of learning by rote (otherwise its almost impossible to make a direct comparison). Perhaps you think Korea and Thailand are economic powerhouses driven by highly educated people and they have universities in the top 10 in the world???? If not can I assume that actually those comparisons are aimed at making Britain look bad using unfair criteria that wouldn't make any sense.

Anonymous said...

CU: my son is studying:-

English Language
English Lit
Maths
Physics
Chemistry
Biology
German
Diploma in IT
History
Art


This is fairly typical. My son is as good at maths as I was 30 years ago, but he's a hell of a lot more confident (as most young people are). Please stop talking down our youth. If Poland is full of well educated geniuses why does it need EU subsidies to get by? Why do these geniuses feel the need to work as hod carriers and Boots shops assistants on a minimum wage?
Come on, wake up. You are buying into Labour Party propaganda.

James Higham said...

Bill's right - the UK yoof is a lazy, uneducated bum. The uneducated bit was only half his fault. The difference between that and an Eastern European is chalk and cheese.

Bill Quango MP said...

Anon: It doesn't matter what is going on in Poland. it matters what those poles are doing when they are here.

We might make some assumptions.

1. Until very recently Poland was a dump. A basket case , polluting, old fashioned, inefficient, heavy industry based centralised economy that had been neglected for decades.

This means that the expectations were lower. That young people quickly realised in the new world of the capitalist eurozone that the jobs might not be coming to Poland, but the poles could go to the jobs.

2. The workers making their way here are the most enterprising. The most confident. The most dedicated.
So they are the best of the Poles.
Whatever the Polish version of our chavs are, they are still in Warsaw, pissing in the Vistula.

3. Speaking English as a second language has been a massive bonus for our European neighbours. No matter how snotty the French got in the 80's, their youth still learned English watching Hollywood movies and listening to MTV.
This a boost to deciding to go abroad and find a new life.

So at the basic job level, the most motivated, confident,dynamic European yoof are arriving to do battle with the Uk yoof.

Its about expectations. There are few expectations in Poland. There are many here. A UK teenager isn't going to think much about £4.98 p/h. It costs 'x' on the bus and 'x' for lunch and fags cost 'x' so ...??Why bother?
But a Polish worker can earn a 'decent' Polish salary picking apples. They have their food and board paid and are in some remote meadow somewhere, so aren't spending like mad. They can send money back home, and still afford to live and work in the UK.
But that's without new DVDs and shoes and designer gear and cars and so on.

From my experience it has always been the same.

When I did my crappy sales jobs in the 80's, selling photocopiers when they came with a 10 year contract or mobile phones in the days when they had their own generator, the sales force was NOT primarily UK based.

South Africans, Jamaicans, Anzacs, Indians, and {ok, I know, but they still traveled down south ..}Scots and Irish.

These jobs were hard. Brutal, commission only, long, long hours, one chance, only as good as your last invoice type jobs.
Only the toughest could hack them.
And, in general terms, the toughest were not from the suburbs. They were people who had traveled to get here and needed to make a living.
Its no more than an anecdote. But I've always felt it demonstrated commitment.

I can't recall in 20 years a single case of taking on an Aussie and being badly let down.
I can recall talking to a UK teenager who genuinely panicked and wanted to go to hospital because he'd drunk a cold coffee.

alan said...

Re: Automation.

Computing, whilst removing a lot of (mundane) jobs, has also created a lot of (skilled) jobs that didnt exist before.

Take a typical engineering company today. They have an IT dept (or outsource) for desktop related hardware/software. Someone made the PC, the OS, the office software, the anti-virus, installed the Ethernet cabling etc. They use CADCAM software rather than paper. The electronic designs are fed into a CNC machine. A CNC is much more complicated than previous tools and requires more maintenance.

An engineering company also works differently than before. Now its so quick to make a prototype, multiple prototypes are made, when only 1, or 2 were made before. Sometimes out of laziness, most times to create a better product. Even your humble shampoo bottle was printed on a 3d printer 10's of times before manufacture.

And I can get almost anything made as a oneoff at a reasonable cost, unlike even 10 years ago. I create my product in CAD software, send the plans to (typically) china. They make a oneoff. Doesn't matter if its a circuit board, or CNC'd aluminum, laser cut wood, 3D plastic part, or custom T-shirt.

And what about those industries that never even existed before. Facebook, Google, Twitter, Nokia, Microsoft etc employ significant numbers of people, producing products that never existed prior to automation.

I completely disagree that computing/automation has reduced the number of jobs. The jobs have changed, but there are just as many as before; whilst allowing us todo tasks that were just not possible before.

The Luddites were wrong in the 19th century about the loom creating mass unemployment. The arguments about automation are just as foolish.

andrew said...
This comment has been removed by the author.
Laban said...

"Immigrants can find jobs in the UK because the benefits system will happily pay out £24,000 a year to UK citizens if they lose their job"

Not unless you have no savings, a rented house and some children. £64 a week for 6 months otherwise.

CityUnslicker said...

right - I am not dissing all UK youth, It is not thier fault the schools are rubbish with teachers one page ahead of them. Many children try hard, then they got degrees which they worked for and now there are no jobs - part of this is expectations management isn't it? Also most people work and do well, unemployment is 8% not 80% so of course I am not tallking about everyeone. But as BQ said, there are is a big proportion of undereducated people out there and also over educated in the wrong subjects.

Then, automation, I do disagree here with the result. Companies need less people as things are less manual. As has been pointed out I can se this in my own lifetime. No more secretaries, no typists, no admin. Yes many more IT people and programmers. But these jobs are global and I know becuase I used to sell Indian IT consultants to UK businesses. So the more jobs thing I astill agree with, although there are compensations. But the jobs are global meaning much more supply of workers for them. Google relatively hard;y employs anyone - nothing like JLR or Rolls-Royce or even British Airways.

Nice debate though, thanks for joinging in.

dearieme said...

That the old heavy industries collapsed in Thatcher's time just shows that even back then the British Working Man wasn't much cop: you couldn't employ him profitably without a subsidy. Not, at least, in the manner in which he wished to be employed.

Laban said...

Telegraph :

Figures from the Office for National Statistics showed that unemployment was 2.62 million in the three months to September.

The number of non-UK nationals in British employment was 2.56 million, up 147,000 from the same period year earlier.

By contrast, the number of UK nationals with jobs was 26.6 million, a fall of 280,000 in a year.

alan said...

@CU

No of Google employees : 20,000
No of Rolls Royce employees : 22,000
No of Intel employees : 96,5000
No of British Airways employees : 57,000
No of IBM (UK) jobs : 20,000
No of IBM (World) jobs : 426,000

For the last 200? years manual jobs in the UK have been automated. In 1812 the population in England was ~10 million, now its ~50 million. So why dont we have 75% unemployment? Answer we have products and services that never existed before, which has created many more new jobs. Compare the products your grandparents used Vs today.

I have a TV, HiFi, DVD, Xbox, Notebook, Internet, GPS, dishwasher, tumbledryer, washing machine, food mixer.... Products my grandparents never had. And without computing/automation products that we would not have today.

Take the humble car. It used to be made my hand and was basically 4 wheels and an engine. Today a typical car has GPS, Radio, MP3 player, ABS, electric windows, heated windscreen, catalytic converter..... Yes less people make actual cars, but all the other features were made somewhere, by someone.

GPS is a great example of something new. How many people were employed creating and maintaining the GPS system? How many people are employed making GPS devices? Maintaining GPS maps?

Sebastian Weetabix said...

@Alan: all very true... but none of it is made here anymore. The UK electronics assembly industry is virtually dead.

As Boris Johnson once said, we cannot make a living selling each other cappucino over the internet.

Electro-Kevin said...

Obviously British Jobs for British Workers sounds a rather vulgar John Bull-ish sentiment in the present zeitgeist - but I fail to see why businesses such as coffee shops (which are no real importance to our national economy) should be subsidised to exclude indiginous young people from their payrolls.

They could

A) Offer better wages which might enable the young to afford a bit of a future

or

B) Simply accept (in lieu of the massive profits they make) that they are part of a national youth training scheme.

It kinda makes me understand why a good few of them got their windows kicked in this summer.

The system actively encourages our youth to be unemployable.

Clearly this method of employment is failing and it is misguided to think that it can go on ad infinitum.

Electro-Kevin said...
This comment has been removed by the author.
Electro-Kevin said...

Further to this.

I was on a train last night. The conductor (a Russian) could barely speak English and his announcements were indecipherable.

A train conductor is a serious job in these parts - circa £25k.

He wasn't doing his job cheaper and he wasn't doing his job better. It's now a fact that recruitment quotas must be met to the detriment of our own people.

Part of my sollution (I have other ideas too) ?

Scrap quotas (The Human Rights Act)

A tax on businesses to the sum of the displaced British workers they've chosen to ignore.

This has to be far better than ridiculous suggestions that we ought to reintroduce National Service etc.

Not too much to ask of The Lemon Tree who have been given licence to fleece their taxpaying customers of £2.50 for a cup of hot water as well as saddling them with all the burdens of mass immigration to enable them to do it.

Bill Quango MP said...

We'll have to revisit this topic EK. Its been a great read from everyone.

One thing. There are no quotas for Russians. They aren't even allowed to work here without a visa. So it may have been an eastern European. Latvian or Estonian or a Serb or some other EU nationality.
And even then, there are no quotas. If the train co has employed a Macedonian-Romanian
guard, that's because they chose too. For reasons that we cannot know.
The guard might have been the best at the interview?
Might have been the only one?
Might have 20 years experience in Czech Rail.

But there are no quotas.

Anonymous said...

He might have been a friend of the employer, who himself was foreign...

These foreigners are a lot better at ethnic solidarity than us.

The problem with stupid Brits who believe in this classical economic theory bs, its like playing a game of football where the opposition are playing as a team but we are not.
But made worse by the fact that most of us don't even notice whats going on.

Alex said...

"The solution is less university places"

Err, "fewer". Getting that right should be a condition of university entrance, like when Oxbridge used to require Latin O levels to keep out the unwashed.

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